Question

For a linear demand curve: Multiple Choice a) elasticity is constant along the curve. b) elasticity is unity at every point on the curve. c) demand is elastic at relatively low prices. d) demand is elastic at relatively high prices.

Answer 1

Answer:

Option (d) is correct.

Explanation:

Linear demand curve represents the relationship between the price of the goods and the quantity demanded for a particular good and there is a inverse relationship between the price of the goods and quantity of goods demanded.

The linear demand is elastic in nature at relatively higher prices. If there is a any increase in the price level then as a result the quantity demanded for that good decreases. Slightly change in the price level will lead to larger change in the quantity demanded.